SBA COVID Economic Injury Disaster Loan borrowers will receive an additional deferral
The head of the US Small Business Administration, Isabella Casillas Guzmanhas directed the agency to provide for an additional deferral of principal and interest payments on existing ones COVID Economic Injury Disaster Loan (EIDL) program Borrowers for a total of 30 months deferral from the start of all approved COVID-EIDL loans.
The extended deferral period will provide additional flexibility for small business owners affected by the pandemic, particularly those in hard-hit sectors coping with disruptions from recent variants, as well as recent supply chain and inflation challenges amid a mounting economic recovery.
Since its inception, the COVID-EIDL program, a federal disaster relief loan, has provided more than $351 billion in relief funds to 3.9 million borrowers, including the smallest small businesses from historically underserved, disadvantaged communities.
“Although our small business owners continue to drive a historic economic recovery under the Biden-Harris administration, we must continue to do everything in our power to hit our small businesses where they are with resources to ensure they recover and.” can thrive,” said SBA Administrator Guzman. “This extended principal and interest deferral will bring financial relief to millions of small business owners — particularly those most impacted by the pandemic and related market challenges — so they can continue to transition, adapt and grow.”
Important information about the deferral:
- This deferral extension applies to all COVID-EIDL loans approved in calendar years 2020, 2021 and 2022. The loans now have an aggregate deferral period of 30 months from the date of the note. Interest will continue to accrue on the loans during the deferral.
- Borrowers may, but are not required to, make partial or full payments during the forbearance. The SBA recommends its use www.pay.gov.
- SBA does not send monthly payment notices on SBA Form 1201; However, the SBA regularly sends payment reminders by email.
- Existing COVID EIDL Borrowers can find account balances and payment due dates in the SBA Capital Access Financial System (CAFS) and learn how to set up an account in the CAFS system by logging in at Capital Access Financial System (sba.gov).
- Deferrals can lead to balloon payments. The deferral will not stop any existing pre-authorized direct debits (PAD) or recurring payments on the loan. COVID-EIDL borrowers with an SBA-established PAD must contact their SBA service center to stop recurring payments during the extended deferral period. COVID-EIDL borrowers who have established a PAD through Pay.Gov or another bill payment service are responsible for terminating recurring payments during the extended deferral period.
- After the grace period expires, COVID-EIDL borrowers are required to make periodic principal and interest payments beginning 30 months from the date of the debenture.
In September 2021 Admin Guzman major improvements announced on the COVID Economic Injury Disaster Loan (EIDL) program. Key changes announced included:
- Increased COVID EIDL cap. The SBA raised the COVID EIDL cap from $500,000 to $2 million. Credit funds can be used for all normal operating expenses and utilities, including payroll, equipment purchases, and paying off debt.
- Implementation of a deferred payment term. The SBA ensured that small business owners didn’t have to start paying back COVID EIDL until two years after lending, so they could keep operating during the pandemic without worrying about making ends meet.
- Establishment of a 30-day exclusivity window. To ensure Main Street businesses have additional time to access these funds, the SBA instituted a 30-day exclusivity window for approval and disbursement of funds for loans of $500,000 or less. Approval and disbursement of loans over $500,000 began after the 30-day deadline.
- Extension of uses. The SBA permitted the use of COVID-EIDL funds to prepay business debt and pay federal business debt.
- Simplification of accession requirements. To simplify the COVID-EIDL application process for small businesses, the SBA has established simplified affiliation requirements to match those of the Restaurant Revitalization Fund (RRF).
Improvements to the application process and fraud prevention
In addition to policy improvements, the SBA has invested in streamlined processes and increased capacity to improve customer service for claimants. Under the direction of Administrator Guzman to quickly and drastically improve COVID EIDL, the revamped management team implemented new processes and performance management, such as: B. Prioritizing staff for COVID EIDL and increasing the average number of application decisions made. Back then, the SBA accelerated the daily processing of loan increases from nearly 2,000 applications to more than 37,000 applications. Loan officer productivity also increased from 1.86 applications per day to 15 applications per day. As a result of these increased credit review rates, the backlog of over 600,000 loan increases was cleared and new applications were processed immediately.
At the same time, and to ensure taxpayer dollars are being used to support companies most in need of COVID-EIDL funding, the SBA has increased fraud controls and is working with the SBA Inspector General to closely monitor the program.
More details for SBA customers
Borrowers with questions may call SBA’s COVID EIDL Customer Service Center toll-free at 1-833-853-5638 (borrowers who are deaf, hard of hearing, or have speech impairments may dial 7-1-1 to access telecom relay services) . or email [email protected] for further assistance. The center is open Monday through Saturday from 8:00 a.m. to 8:00 p.m. ET. Multilingual representatives are available. Small business owners can also contact SBA’s resource partners by visiting them www.sba.gov/local-assistance. For more information on COVID EIDL, visit www.sba.gov/relief.